McDonald's applies machine learning to determine prices for its dishes, covering nearly 14,000 restaurants, according to a Reuters report. The system analyzes millions of transactions daily and suggests the 'optimal price' for each menu item in each restaurant. One of the factors considered is how much customers are willing to pay at each specific establishment. For example, at a restaurant in Fresno, California, a Big Mac is sold for $5.69, while at another restaurant two miles away, the price is $6.89, which is 21% higher. Despite this, Reuters could not confirm that AI was the cause of such a discrepancy.
This AI platform is managed by Tiger Analytics, and McDonald's provides its own conditions and corporate goals, such as focusing on raising prices for items that have not changed for two years and excluding ice cream and soft drinks from price increases in the summer. Officially, franchise owners set their own prices, but they have documented pressure from the company to follow recommendations. A document presented in June shows that McDonald's closely monitors deviations from its pricing recommendations. Since January, franchises are required to 'constructively engage' with approved pricing consultants.
CEO Chris Kempczinski told investors in August that 'price discrepancies in some cases' are considered when evaluating franchise businesses. Additionally, the platform's rules warn owners that they may be competitors of each other and must comply with antitrust laws. McDonald's describes its platform as a 'tool, not a directive,' intended to provide recommendations specific to each restaurant, and emphasizes that prices may vary even between restaurants located in close proximity to each other. The company called the Reuters report 'speculative and uninformed' and stated that it takes compliance with antitrust regulations seriously.
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